Consumer Confidence Continues to Be Low

"Consumer confidence is at its weakest level in 17 years," according to Lynn Franco, director of The Conference Board's Consumer Research Center, producer of the Consumer Confidence Index, which surveys 5,000 households every month for their economic views. Franco says, "it looks troubling for current conditions and in terms of where the economy is headed." Another survey that tracks consumer confidence — the Reuters/University of Michigan Surveys of Consumers — had similar findings.

When consumers are satisfied or optimistic about their economic situations, they are more likely to buy a home. But with consumer confidence at its lowest level in nearly two decades, some economists think the real estate market is unlikely to rebound until at least 2009.

Early in 2007, both those surveys reported an uptick in consumer confidence, leading some economists to predict that 2007 would mark a real estate industry turnaround. Instead, consumer confidence dropped sharply last summer.

Though no one doubts the economy eventually will turn around, the consensus is that it will be a gradual process and consumers should not expect to see a market turnaround over night. However, consumer confidence surveys typically give economists a preview of what the market is going to do.

So what does that mean for the housing market?

Homebuyers and home sellers are largely sitting on the sidelines, but for different reasons. Homebuyers aren't so much concerned about interest rates since rates are still the low side. Instead, many prospective buyers seem more concerned about their creditworthiness.

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